269. Why inflation is a welcome return to Japan

Praveen Kumar, manager of the Baillie Gifford Shin Nippon investment trust, tells us about the welcome return and impact of ‘mild inflation’ to a country that has had more than two decades of deflation. He details the subsequent shift in mindset for domestic investors and how this is boosting the domestic equity markets. Praveen then gives us his views on the growth prospects for Japan - boosted by advances in the application of AI - and the impact of this on the fund’s own holdings.<br/><br/>What’s covered in this episode:The impact of inflation on Japanese spenders - and saversThe surprising behaviour that Japan and Germany have in commonHow the domestic investment market is benefitting from the inflationary environmentWhat the lack of correlation between economic growth and stock market returns means for investorsGeopolitical tensions and the positive implications for the Japanese economyWhy regulation and global comparison are attracting foreign investment into JapanHow Japan’s current demographics are influencing AI take-upHow the AI industry in Japan is different to elsewhereAI in the cosmetics and construction sectorMore about the trust: <br/>The Baillie Gifford Shin Nippon trust aims to provide long-term capital growth by investing in smaller companies listed on the Japanese stock market. Shin Nippon means ‘new Japan’ and this trust focuses on emerging or disrupted sectors, where the manager sees innovative growth opportunities. The team is prepared to bide its time while these companies reach their full potential and, while the trust can be highly volatile, patient investors have been richly rewarded.<br/><br/>Learn more on fundcalibre.com<br/><br/>Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening. Elite Ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.